The Philippine Labor Index … a work in progress … a progress in work ILO/UNDP-ILS/BLES PROJECT ISO 9001:2000 Certified Institute for Labor Studies Bureau of Labor and Employment Statistics

Contents of Presentation  The Philippine Labor Index and its Uses and its Uses  Decent Work and its Dimensions  The PLI Component Indicators  The Methodology for Index Construction  The PLI and its Dimension Indices  Comparisons with Related Development Indicators  Issues and Concerns

The Philippine Labor Index and its Uses

What is the PLI? Philippine Labor Index … is a summary measure that monitors the progress made towards achieving the labor and employment goals of the country.

What are the uses of the PLI? Provides a balanced and objective assessment of collective efforts to attain the country’s employment goals Provides a balanced and objective assessment of collective efforts to attain the country’s employment goals Provides useful data for policy-makers on areas that need to be enhanced/ strengthened Provides useful data for policy-makers on areas that need to be enhanced/ strengthened Complements other development indicators in monitoring social and economic progress of the working population Complements other development indicators in monitoring social and economic progress of the working population

What is the basis of the PLI? PLI is based on the ILO Decent Work Framework Decent work is defined as … “ opportunities for women and men to obtain decent and productive work, in conditions of freedom, equity, security and human dignity. “

Decent Work and its Dimensions

What are the core objectives of Decent Work? To achieve universal respect for fundamental principles and rights at work To achieve universal respect for fundamental principles and rights at work To create greater employment and income opportunities for women and men To create greater employment and income opportunities for women and men To extend social protection To extend social protection To promote social dialogue To promote social dialogue

What are the conceptual dimensions of Decent Work? Opportunities for work Opportunities for work Freedom of choice of employment Freedom of choice of employment Productive work Productive work Equity in work Equity in work Security at work Security at work Dignity at work Dignity at work

The PLI Component Indicators

How were the indicators selected? series of consultations and workshops series of consultations and workshops application of statistical tools application of statistical tools conduct of technical sessions conduct of technical sessions

What are the component indicators of each dimension? Opportunities for work unemployment to local working age population ratio (unemp1) unemployment to local working age population ratio (unemp1) percentage of wage and salary workers to total employed (employee) percentage of wage and salary workers to total employed (employee) percentage of part-time workers or those working less than 40 hours a week to total employed (less40) percentage of part-time workers or those working less than 40 hours a week to total employed (less40)

Freedom of Choice of Employment employment rate of children aged years (emp1014) school attendance rate of children aged years (sch1017) Productive Work percentage of employed working 40 to 48 hours a week to total employed (emp4048) visible underemployment rate (visund) percentage of low-paid employees or those earning below ½ the median hourly basic pay to total employees (bhalfmed)

Equity in Work female-male ratio in non-agricultural wage employment (fmnagri) female-male ratio in non-agricultural wage employment (fmnagri) industry-agriculture hourly basic pay ratio (indag) industry-agriculture hourly basic pay ratio (indag) female-male hourly basic pay ratio for clerical, sales and service occupations (fmcler) female-male hourly basic pay ratio for clerical, sales and service occupations (fmcler)

Security at Work percentage of permanently employed to total employed (permemp) percentage of permanently employed to total employed (permemp) percentage of workers covered by social security schemes to total self- employed and employees (sshare) percentage of workers covered by social security schemes to total self- employed and employees (sshare) permanently displaced workers due to economic reasons per 1,000 wage and salary workers in private establishments (permdis) permanently displaced workers due to economic reasons per 1,000 wage and salary workers in private establishments (permdis)

Representation at Work union density rate for government and private establishments (udens) union density rate for government and private establishments (udens) collective bargaining coverage rate for private establishments (prvcba) collective bargaining coverage rate for private establishments (prvcba) mandays lost due to strikes and lockouts per employee (mandlost) mandays lost due to strikes and lockouts per employee (mandlost) percentage of worker association membership to total employed (wamem) percentage of worker association membership to total employed (wamem)

The Methodology for Index Construction

Shortfall or gap approach Shortfall or gap approach Use of benchmarks Use of benchmarks Determination of dimension and overall indices Determination of dimension and overall indices How was the PLI constructed?

Three approaches to constructing the indices were compared: simple average simple average shortfall or gap approach shortfall or gap approach principal components analysis principal components analysis

The study recommends the use of the shortfall or gap approach in computing the index. It was found to be: flexible flexible sufficiently simple sufficiently simple appropriate appropriate

Benchmarks The following minimum and maximum values were set for each component indicator.

Opportunities for Work IndicatorMinMax unemployment to local working age population ratio (unemp1) 595 percentage of wage and salary workers to total employed (employee) 2080 percentage of part-time workers to total employed (less40) 2080

Freedom of Choice of Employment IndicatorMinMax employment rate of children aged years (emp1014) 199 school attendance rate of children aged years (sch1017) 0100

Productive Work IndicatorMinMax percentage of employed working 40 to 48 hours a week to total employed (emp4048) 2080 visible underemployment rate (visund) 595 percentage of low paid employees (bhalfmed) 045

Equity in Work IndicatorReference Max | C k – 1| female-male ratio in non-agricultural wage employment (fmnagri) 11 industry-agriculture hourly basic pay ratio (indag) 12 female-male hourly basic pay ratio for clerical, sales and service occupations (fmcler) 11

Security at Work IndicatorMinMax percentage of permanently employed to total employed (permemp) 1090 percentage of workers covered by social security schemes to total self- employed and employees (ssshare) 0100 permanently displaced workers due to economic reasons per 1,000 wage and salary workers in private establishments (permdis) 595

Representation at Work IndicatorMinMax union density rate for government and private establishments (udens) 050 collective bargaining coverage rate for private establishments (prvcba) 050 mandays lost due to strikes and lockouts per employee (mandlost) 126 percentage of worker association membership to total employed (wamem) 060

Component Index Value

However, for a negatively oriented indicator, the index value is, where the translated value is the actual value subtracted from 100 (or the sum of the minimum and maximum benchmark values) Translation is done so that all indicators would have uniformly positively orientation.

The Dimension Index Each dimension index is computed by averaging the component index values of each dimension where C k is the index value of the component indicator and n is the number of indicators in the dimension

For Equity in Work, a different approach is used to derive the dimension index. It takes the form, where the shortfall value of the component indicator is, where k =1, 2, 3

Philippine Labor Index The dimensions were categorized into two groups The dimensions were categorized into two groups 1.Opportunities for Work and Freedom of Choice of Employment - concerned with the availability of work and the acceptable scope of work 2.Productive Work, Equity in Work, Security at Work and Representation at Work - concerned with the extent to which the work is decent or quality of employment The simple average of the dimension indices of each group was computed and each was assigned a weight of 50% The simple average of the dimension indices of each group was computed and each was assigned a weight of 50% The PLI is the sum of the weighted indices The PLI is the sum of the weighted indices

Weights used for the PLI Dimension Group Weight Weight in the Group Dimension Weight Opportunities for Work Freedom of Choice Productive Work Equity in Work Security at Work Representation at Work

The Philippine Labor Index and its Dimension Indices Note: The indices are unofficial and not for quotation.

Opportunities for Work Year Actual Data Index Percent Change unemp1employeeless (0.40) (4.38) (0.79) Note: The definition of unemployment excludes the availability criterion.

Freedom of Choice of Employment Year Actual Data Index Percent Change emp1014sch (4.22) (6.08) (1.76)

Productive Work Year Actual Data Index emp4048visundbhalfmed a a a a - Excludes data for one indicator.

Equity in Work Year Actual Data Index fmnagriindagfmcler a a a a - Excludes data for two indicators.

Security at Work Year Actual Data Index Percent Change permempsssharepermdis r r r r (0.63) r- Revised.

Representation at Work Year Actual Data Index udensprvcbamandlostwamem a a a r r a - Excludes data for one indicator. r - Revised.

The PLI Dimension Philippine Labor Index r Opportunities for Work Freedom of Choice Productive Work Equity in Work Security at Work r Representation at Work r r- Revised.

Comparisons with Related Development Indicators

Comparisons of GDP Growth, Poverty Incidence, Opportunities for Work Index and Freedom of Choice of Employment, Indicator GDP Growth (%) Poverty Incidence (%) - Population - Population Families - Families Opportunities for Work Index % Change - % Change(0.40)1.69(4.38)(0.79) Freedom of...Index % Change - % Change(4.22)10.00(6.08)(1.76)

GDP Growth and Changes in Indices of Opportunities for Work and Freedom of Choice of Employment,

The Philippine Labor Index and the Philippine Human Development Index Indicator Reference Year Index Philippine Labor Index Philippine Human Development Index* * The actual value is It is expressed in units similar to PLI for comparison purposes.

Issues and Concerns

Interpretation of the indices Acceptance of the PLI by the stakeholders

Issues and Concerns Institutionalization of the data collection system Periodical assessment of the component indicators and the specified limits or benchmarks

Issues and Concerns Use of the PLI to criticize government performance Use of the PLI to put down the country in the international arena

Issues and Concerns Development or construction of labor indices at the regional level for purposes of monitoring the achievements of the regions in the six dimensions of decent work across time Preparation of Decent Work Status Report

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